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| US growth revised down amid fears of global slowdown - business live | US growth revised down amid fears of global slowdown - business live |
| (32 minutes later) | |
| Today’s GDP report further muddies the water about whether Donald Trump achieved his target of 3% growth last year, or not. | |
| The Commerce Department estimates that GDP rose by 2.9% in 2018, just shy of Trump’s 3% target. | |
| However, it also reckons GDP was 3% higher in Q4 than in Q4 2017 -- which the president could chalk up as a win. | |
| Either way, if the economy does keep slowing, Trump will take some blame. | |
| The New York Times says: | |
| Economic data suggests that slowdown is already underway in the first quarter. Manufacturing is losing some of its steam from last year’s rapid growth, and job creation is also moderating. | |
| Chief executives of some of the nation’s biggest companies see investment, hiring and sales growth all slowing this year. Three-quarters of business economists say they are more worried about growth undershooting their forecasts than overshooting it, and half have revised those forecasts downward for this year. | |
| Another sign the economy is slowing: 4Q GDP revised to 2.2% from 2.6%. Trump's economic policies now face a major test. https://t.co/CKhn0MJfdn | |
| US #GDP grows +2.2% QoQ in 4Q less than expected 2.4%, a further signal US economy is slowing down pic.twitter.com/q2POCPuCHb | |
| Here’s some instant reaction to the US GDP report. | Here’s some instant reaction to the US GDP report. |
| Marketwatch’s Jeffry Bartash highlights why growth has been revised lower: | Marketwatch’s Jeffry Bartash highlights why growth has been revised lower: |
| U.S. 4th-quarter GDP cut to 2.2% from 2.6%, but increase in 2018 left at 2.9%. Consumer spending and biz investment marked down and drop in state & local spending deeper than originally reported. Adjusted pretax corporate profits fall 0.4% - first decline in 7 quarters. | U.S. 4th-quarter GDP cut to 2.2% from 2.6%, but increase in 2018 left at 2.9%. Consumer spending and biz investment marked down and drop in state & local spending deeper than originally reported. Adjusted pretax corporate profits fall 0.4% - first decline in 7 quarters. |
| Guy LeBas of Janney Capital Management argues we shouldn’t panic about it: | Guy LeBas of Janney Capital Management argues we shouldn’t panic about it: |
| Downward revision on 4Q GDP +2.2% missed expectations but only by a hair. Real final sales +2.1% is right near post-GFC trend.Anyone who tells you this number is "terrible!" is either thrashing a bearish mkt thesis or politicizing. It's right on trend. pic.twitter.com/mKSvrOePPy | Downward revision on 4Q GDP +2.2% missed expectations but only by a hair. Real final sales +2.1% is right near post-GFC trend.Anyone who tells you this number is "terrible!" is either thrashing a bearish mkt thesis or politicizing. It's right on trend. pic.twitter.com/mKSvrOePPy |
| Newsflash: America’s economy grew more slowly than previously thought in the last three months of 2018. | Newsflash: America’s economy grew more slowly than previously thought in the last three months of 2018. |
| Newly revised data shows that US GDP only expanded at an annualised rate of 2.2% in October-December. That’s down from a previous estimate of 2.6%, and slower than the 3.4% annualised growth recorded in the third quarter of 2018. | Newly revised data shows that US GDP only expanded at an annualised rate of 2.2% in October-December. That’s down from a previous estimate of 2.6%, and slower than the 3.4% annualised growth recorded in the third quarter of 2018. |
| That’s the equivalent of a quarter-on-quarter growth rate of 0.55% -- still faster than the UK or the eurozone, which both only expanded by 0.2% in Q4. | That’s the equivalent of a quarter-on-quarter growth rate of 0.55% -- still faster than the UK or the eurozone, which both only expanded by 0.2% in Q4. |
| US GDP (Q4 T) +2.2% versus +2.4% expected, previous +2.6% $USD $DXY | US GDP (Q4 T) +2.2% versus +2.4% expected, previous +2.6% $USD $DXY |
| The Commerce Department revised down its earlier estimate after concluding that corporate profits were only flat in the last quarter, after growing by 3.5% in Q3. | The Commerce Department revised down its earlier estimate after concluding that corporate profits were only flat in the last quarter, after growing by 3.5% in Q3. |
| Consumer spending was also weaker than previously thought, at 2.5% compared to 2.8% estimated before. | Consumer spending was also weaker than previously thought, at 2.5% compared to 2.8% estimated before. |
| Business spending and investment was also revised down. | Business spending and investment was also revised down. |
| Ranko Berich, head of market analysis at Monex Europe, argues that president Erdoğan should stop attacking international investors, and start reassuring them. | Ranko Berich, head of market analysis at Monex Europe, argues that president Erdoğan should stop attacking international investors, and start reassuring them. |
| He writes: | He writes: |
| The Central Bank’s efforts to dry up short term liquidity may have indeed made it impossible for speculators to short the lira. However, the lira’s real issue isn’t a surplus of speculative short sellers - it’s a chronic deficit of faith in the currency among investors and locals, and the events of the past week have made things worse, not better. | The Central Bank’s efforts to dry up short term liquidity may have indeed made it impossible for speculators to short the lira. However, the lira’s real issue isn’t a surplus of speculative short sellers - it’s a chronic deficit of faith in the currency among investors and locals, and the events of the past week have made things worse, not better. |
| The central bank’s liquidity freeze, combined with a poorly explained fall in already low FX reserves over the past month and a fresh round of low-rate rhetoric from Erdogan this morning, are the exact opposite of what would reassure investors. This morning’s promises from CBRT governor Murat Cetinkaya that reserves rose in recent days and will continue to do so are encouraging, but what markets really need is an assurance that monetary policy will be set for the purposes of the real economy. | The central bank’s liquidity freeze, combined with a poorly explained fall in already low FX reserves over the past month and a fresh round of low-rate rhetoric from Erdogan this morning, are the exact opposite of what would reassure investors. This morning’s promises from CBRT governor Murat Cetinkaya that reserves rose in recent days and will continue to do so are encouraging, but what markets really need is an assurance that monetary policy will be set for the purposes of the real economy. |
| Over in Turkey, president Erdoğan has launched a stinging attack on western countries for (he claims) trying to create a currency crisis. | Over in Turkey, president Erdoğan has launched a stinging attack on western countries for (he claims) trying to create a currency crisis. |
| Erdoğan told an election rally in Ankara that recent lira volatility was due to attacks from countries such as the US, vowing to “discipline speculators in the markets”, Reuters reports. | Erdoğan told an election rally in Ankara that recent lira volatility was due to attacks from countries such as the US, vowing to “discipline speculators in the markets”, Reuters reports. |
| Erdogan: Turkey has to cut interest rates or high inflation problem will persist pic.twitter.com/Gk7CVUgG8h | Erdogan: Turkey has to cut interest rates or high inflation problem will persist pic.twitter.com/Gk7CVUgG8h |
| #BREAKING - President Erdogan: Exchange rate fluctuations are attempt to corner Turkey by the West, particularly the US | #BREAKING - President Erdogan: Exchange rate fluctuations are attempt to corner Turkey by the West, particularly the US |
| Erdoğan also argued that Turkey’s inflation rate will ease once the country has lowered interest rates -- a position which clashes with conventional monetary policy (which states that higher borrowing costs should squeeze inflation). | Erdoğan also argued that Turkey’s inflation rate will ease once the country has lowered interest rates -- a position which clashes with conventional monetary policy (which states that higher borrowing costs should squeeze inflation). |
| Cumhurbaşkanı Erdoğan: Bunlar, batının Türkiye'yi sıkıştırma operasyonlarıdır. Sıkıştırma operasyonu ters tepti. Bir sıkıntımız var enflasyon. Düşüş başladı. Asıl sıkıntı faiz konusu. Faizi düşürdükçe enflasyon düşecektir. Asıl mesele faizdir https://t.co/oZTXySegqo pic.twitter.com/p2Q4cZmyMi | Cumhurbaşkanı Erdoğan: Bunlar, batının Türkiye'yi sıkıştırma operasyonlarıdır. Sıkıştırma operasyonu ters tepti. Bir sıkıntımız var enflasyon. Düşüş başladı. Asıl sıkıntı faiz konusu. Faizi düşürdükçe enflasyon düşecektir. Asıl mesele faizdir https://t.co/oZTXySegqo pic.twitter.com/p2Q4cZmyMi |
| The lira is still down around 5% today, at 5.8 lira to the US dollar, following those signs that Turkish banks have begun giving foreign counterparts access to the currency again. | The lira is still down around 5% today, at 5.8 lira to the US dollar, following those signs that Turkish banks have begun giving foreign counterparts access to the currency again. |
| Robin Bew doesn’t agree that the UK could soon resemble an emerging market..... but he still fears economic pain ahead. | Robin Bew doesn’t agree that the UK could soon resemble an emerging market..... but he still fears economic pain ahead. |
| Too extreme for Mobius to say #UK will end up like emerging market. Project fear. But ending up more like #Italy seems plausible, as in structurally slower growth, economy starkly divided into winners and losers, public finances under strain and public services flakey. | Too extreme for Mobius to say #UK will end up like emerging market. Project fear. But ending up more like #Italy seems plausible, as in structurally slower growth, economy starkly divided into winners and losers, public finances under strain and public services flakey. |
| Uh oh! One of the world’s most experience investment managers has claimed that a no-deal Brexit could create a currency crisis, and leave the UK looking more like an “emerging market” economy. | Uh oh! One of the world’s most experience investment managers has claimed that a no-deal Brexit could create a currency crisis, and leave the UK looking more like an “emerging market” economy. |
| Mark Mobius, a veteran of emerging market investing, told the Financial Times that the pound would tumble to parity against the dollar and Britain’s credit rating would be cut, if it crashes out of the European Union. | Mark Mobius, a veteran of emerging market investing, told the Financial Times that the pound would tumble to parity against the dollar and Britain’s credit rating would be cut, if it crashes out of the European Union. |
| He argued: | He argued: |
| “Up to now, the UK is riding on the coat-tails of the EU, in the sense that [the UK] can have very low interest rates,. | “Up to now, the UK is riding on the coat-tails of the EU, in the sense that [the UK] can have very low interest rates,. |
| “As soon as they break, people are going to start looking hard and fast. The rating agencies will say ‘wait a minute, no more EU association? We’ve got to downgrade.’” | “As soon as they break, people are going to start looking hard and fast. The rating agencies will say ‘wait a minute, no more EU association? We’ve got to downgrade.’” |
| Mobius also warned that Britain is vulnerable to a market panic, given its large balance of payments deficit and large debt pile. | Mobius also warned that Britain is vulnerable to a market panic, given its large balance of payments deficit and large debt pile. |
| The FT explains: | The FT explains: |
| The UK is like an emerging market now. Their balance of payments is terrible; their government debt is terrible; their fiscal debt is terrible,” said Mr Mobius, who spent most of his career working for the US asset manager Franklin Templeton. | The UK is like an emerging market now. Their balance of payments is terrible; their government debt is terrible; their fiscal debt is terrible,” said Mr Mobius, who spent most of his career working for the US asset manager Franklin Templeton. |
| The 82-year-old said that the UK lacked leadership and described the June 2016 referendum as a “fraud” because voters were “lied to and they made a mistake in making this vote”. | The 82-year-old said that the UK lacked leadership and described the June 2016 referendum as a “fraud” because voters were “lied to and they made a mistake in making this vote”. |
| UK ‘like an emerging market’, warns veteran fund manager https://t.co/UIvr6a1NvQ | UK ‘like an emerging market’, warns veteran fund manager https://t.co/UIvr6a1NvQ |
| Newsflash: Eurozone economic confidence has sunk to its lowest level since 2016, with the UK particularly gloomy. | Newsflash: Eurozone economic confidence has sunk to its lowest level since 2016, with the UK particularly gloomy. |
| The European Commission’s gauge of economic sentiment fell this month, dragged down by rising pessimism among industry bosses. Consumers remain gloomy, and service sector confidence also dipped this month. | The European Commission’s gauge of economic sentiment fell this month, dragged down by rising pessimism among industry bosses. Consumers remain gloomy, and service sector confidence also dipped this month. |
| Euro-Area Economic Confidence Falls To 105.5 in March, Lowest Since 2016 | Euro-Area Economic Confidence Falls To 105.5 in March, Lowest Since 2016 |
| This is the ninth monthly fall in a row, highlighting how the eurozone has become more anxious since last summer as growth has weakened, trade tensions have intensified, and Brexit deadlock has failed to ease. | This is the ninth monthly fall in a row, highlighting how the eurozone has become more anxious since last summer as growth has weakened, trade tensions have intensified, and Brexit deadlock has failed to ease. |
| UK consumers are particularly anxious, the EC warns, with confidence the weakest since November 2013. | UK consumers are particularly anxious, the EC warns, with confidence the weakest since November 2013. |
| UK consumer confidence falls to lowest level since Nov 2013, according to European Commission figures out just now pic.twitter.com/lCcdZQlp4G | UK consumer confidence falls to lowest level since Nov 2013, according to European Commission figures out just now pic.twitter.com/lCcdZQlp4G |
| BCC chief Adam Marshall adds that MPs should pick on of three options to end the Brexit uncertainty: | BCC chief Adam Marshall adds that MPs should pick on of three options to end the Brexit uncertainty: |
| They could choose to vote for the withdrawal agreement negotiated by the government over the past two years | They could choose to vote for the withdrawal agreement negotiated by the government over the past two years |
| They could seek a longer extension to the Article 50 process, tied to a concrete purpose and endpoint | They could seek a longer extension to the Article 50 process, tied to a concrete purpose and endpoint |
| Or they could choose to revoke Article 50 and commit to membership of the European Union for the immediate future. | Or they could choose to revoke Article 50 and commit to membership of the European Union for the immediate future. |
| The head of one of Britain’s biggest business lobby groups has called on MPs to stop “chasing rainbows” and avoid no-deal Brexit, warning that severe damage has been caused to companies across the country. | The head of one of Britain’s biggest business lobby groups has called on MPs to stop “chasing rainbows” and avoid no-deal Brexit, warning that severe damage has been caused to companies across the country. |
| Adam Marshall, the director general of the British Chambers of Commerce, says that a “Brexit black hole” has pushed up firms’ costs, lost companies’ orders and put investments on hold, damaging the economy while the risk of no-deal Brexit remains. | Adam Marshall, the director general of the British Chambers of Commerce, says that a “Brexit black hole” has pushed up firms’ costs, lost companies’ orders and put investments on hold, damaging the economy while the risk of no-deal Brexit remains. |
| “Three years going round in circles. Three years is long enough,” he says at the start of the BCC’s annual conference in Westminster. | “Three years going round in circles. Three years is long enough,” he says at the start of the BCC’s annual conference in Westminster. |
| He says a firm he speaks to in the West Midlands has mothballed its flagship project and put some of its assets up for sale because its investors want to move their money, “to a more stable country”. | He says a firm he speaks to in the West Midlands has mothballed its flagship project and put some of its assets up for sale because its investors want to move their money, “to a more stable country”. |
| “Uncertainty is generating a growing list of business casualties and a litany of rising costs,” Marshall says, adding that MPs must do all that they can to avoid a no-deal Brexit. | “Uncertainty is generating a growing list of business casualties and a litany of rising costs,” Marshall says, adding that MPs must do all that they can to avoid a no-deal Brexit. |
| “It cannot be right that we leave in a way where government itself predicts there will be mass disruption to businesses and communities... A messy and disorderly exit would not just be deeply irresponsible – it would be a flagrant dereliction of duty.” | “It cannot be right that we leave in a way where government itself predicts there will be mass disruption to businesses and communities... A messy and disorderly exit would not just be deeply irresponsible – it would be a flagrant dereliction of duty.” |
| Newsflash: Goldman Sachs has been fined £34.3m by Britain’s City watchdog, for failing to report financial transactions properly for a decade. | Newsflash: Goldman Sachs has been fined £34.3m by Britain’s City watchdog, for failing to report financial transactions properly for a decade. |
| The Financial Conduct Authority says Goldman didn’t provide complete, accurate and timely information related to over 213 million transactions, between 2007 and 2017. | The Financial Conduct Authority says Goldman didn’t provide complete, accurate and timely information related to over 213 million transactions, between 2007 and 2017. |
| Mark Steward, FCA Executive Director of Enforcement and Market Oversight, says this blunder made it harder for regulators to spot financial crime: | Mark Steward, FCA Executive Director of Enforcement and Market Oversight, says this blunder made it harder for regulators to spot financial crime: |
| ‘The failings in this case demonstrate a failure over an extended period to manage and test controls that are vitally important to the integrity of our markets. These were serious and prolonged failures. We expect all firms will take this opportunity to ensure they can fully detail their activity and are regularly checking their systems so any problems are detected and remedied promptly, unlike in this case.’ | ‘The failings in this case demonstrate a failure over an extended period to manage and test controls that are vitally important to the integrity of our markets. These were serious and prolonged failures. We expect all firms will take this opportunity to ensure they can fully detail their activity and are regularly checking their systems so any problems are detected and remedied promptly, unlike in this case.’ |
| Accurate and complete transaction reporting helps underwrite market integrity and supervise firms and markets. In particular, transaction reports help the FCA identify potential instances of market abuse and combat financial crime. | Accurate and complete transaction reporting helps underwrite market integrity and supervise firms and markets. In particular, transaction reports help the FCA identify potential instances of market abuse and combat financial crime. |
| One of Sweden’s largest banks has dismissed its chief executive, just a day after being raided as part of an investigation into Russian money laundering. | One of Sweden’s largest banks has dismissed its chief executive, just a day after being raided as part of an investigation into Russian money laundering. |
| Swedbank CEO Birgitte Bonnesen was fired this morning, just minutes before she was due to face angry investors at its annual meeting. | Swedbank CEO Birgitte Bonnesen was fired this morning, just minutes before she was due to face angry investors at its annual meeting. |
| Several top shareholders had already pledged to vote against granting Bonnesen “freedom from liability” from any future legal action from investors. | Several top shareholders had already pledged to vote against granting Bonnesen “freedom from liability” from any future legal action from investors. |
| Yesterday, prosecutors in Stockholm raided Swedbank offices, following reports that its Estonian operations handled €135bn of risky money from non-residents, mostly Russians. | Yesterday, prosecutors in Stockholm raided Swedbank offices, following reports that its Estonian operations handled €135bn of risky money from non-residents, mostly Russians. |
| Swedbank Chairman Lars Idermark said in a statement. | Swedbank Chairman Lars Idermark said in a statement. |
| The developments during the past days have created an enormous pressure for the bank. Therefore, the Board has decided to dismiss Birgitte Bonnesen from her position” | The developments during the past days have created an enormous pressure for the bank. Therefore, the Board has decided to dismiss Birgitte Bonnesen from her position” |
| Shares in Swedbank are down 3.7% today, adding to a 12% plunge yesterday. | Shares in Swedbank are down 3.7% today, adding to a 12% plunge yesterday. |
| The Swedbank two step. pic.twitter.com/q5n11e2jDG | The Swedbank two step. pic.twitter.com/q5n11e2jDG |
| Currency expert Marc-André Fongern of MAF Global Forex flags up that Turkey goes to the polls in local elections this Sunday. | Currency expert Marc-André Fongern of MAF Global Forex flags up that Turkey goes to the polls in local elections this Sunday. |
| With the country in recession, President Erdoğan will want to avoid more financial angst before Turks head to the polls (although this rather backfired yesterday, when the main stock index fell almost 6%). | With the country in recession, President Erdoğan will want to avoid more financial angst before Turks head to the polls (although this rather backfired yesterday, when the main stock index fell almost 6%). |
| Turkey | TRY : The important thing to watch is policy after elections. The government tends to veer towards more orthodox policy when under pressure. cc. @AB_insights #Turkey #USDTRY #Lira #FX cc. @graemewearden https://t.co/rPn8Rq7sgq | Turkey | TRY : The important thing to watch is policy after elections. The government tends to veer towards more orthodox policy when under pressure. cc. @AB_insights #Turkey #USDTRY #Lira #FX cc. @graemewearden https://t.co/rPn8Rq7sgq |